Enrique Miguel Valles is president and chief operating officer of Manila-based Mida Food. The company was set up 26 years ago by his aunt and acted as an agent for western multinationals like Chicken of the Sea in sourcing seafood from the Philippines and Indonesia. That business is still going, but the company now also has a large import and trade business which continues to grow as the Philippine’s economy continues to expand.
SeafoodSource: You've attended a showcase of American seafood products in Bangkok recently. Do you think the Philippines is ready for U.S. imports?
Valles: Absolutely, it can work. Prices [of imports] have dropped sufficiently for this to happen. We are looking at lobster, and salmon to an extent. The problem is we don’t have these types of [seafood export promotion] events in the Philippines. Yes, the USDA organizes such events, but to promote meat [exports]. Imagine if we had events like this [for seafood] – then it would work.
SeafoodSource: Your company started out as an agent for U.S. buyers of Filipino and Indonesian seafood, but now you’re also importing?
Valles: On the import and distribution side, it happened by accident. A lot of Indonesian plants we deal with on tuna were struggling to dispose of byproducts and they were happy to give them to us very cheap.
SeafoodSource: Is it easy to import seafood?
Valles: Managing customer relations in the Philippines is tough. We sell to hotels, food chains, and franchisees of chains like TGI Fridays, etcetera. We have to maintain three different sets of relations with the owner, the purchaser, and the chef or quality control officer. Each one of these three stakeholders has a different objective.
SeafoodSource: What kind of high-end seafood are you importing?
Valles: Predominantly black cod, lobster, and king crab. And Atlantic salmon. The Philippines love fat! If they don’t see the fat lines they say this fish is old or it’s tired! The problem is [imported] items are not widely known.
SeafoodSource: And you aim to introduce Alaskan salmon. Will this product work in the Philippines market?
Valles: There is no awareness of wild salmon. But some things happened in the past two years. A lot of big casinos and hotels have opened, like the Akoda and the City of Dreams. Then there’s lots of five-star hotels, like the Grand Hyatt and the Shangri La. They have brought in foreign chefs. And they are asking for products we don’t normally stock.
They are talking on angles that are new to us, like sustainability. Therefore we have had to introduce new products. And we have had to retool. Ten of the past 15 years we were bringing in new products – half of which wouldn’t work and we had to dump them. Therefore when we saw what would be accepted, we stuck with that. Now it’s time to readjust.
SeafoodSource: What are the big imported species in volume terms?
Valles: From a volume angle, pangasius [from Vietnam] is the largest import, but we also import a lot of tuna. Tuna by products sell well, like tails and bellies. These are for foodservice and retail.
SeafoodSource: And you mostly supply retail or food service?
Valles: Seventy percent of our business is foodservice and 30 percent is retail. There is a grey area with regard to imports for retail in the Philippines. The Bureau of Fisheries rule says imports can’t be supplied to the wet markets. But there is a grey area defining what a supermarket is – sometimes it’s interpreted [by government] as a wet market. This is a challenge.
SeafoodSource: It sounds like supplying seafood to retailers is a difficult business.
Valles: Yes. Additionally, retailers don’t want the responsibility of moving items. We have what’s called a modified consigned arrangement, which means the retailer will be in charge of ordering but has no risk. Therefore we own the product until it’s been scanned and sold to the end consumer. We need to hire merchandisers, so if a retailer buys a box of pangasius, my guy in this store receives the stock and puts it on the shelves and keeps a count every day.
It’s been an expensive lesson to learn, the whole ideas of merchandisers in each outlet… [At the start], we didn’t have a system of inventory-taking and we have had to write off a lot of inventory.
We have had to set up an entire division, the merchandizing division. We have 80 permanent staff and 30 in our processing plant. But there’s 50 merchandizing contractors and ten more staff to manage them!
SeafoodSource: How about logistics in the Philippines – is there a good cold chain in place?
Valles: It’s getting better. In 20 years, our cold chain is one of the most efficient, with international standards. Twenty-five years ago, with U.S. help, we set up the Supply Chain Association of the Philippines. That association has evolved and helped us but there are 7,000 islands and to get from one island to another is very difficult. And in the southern Philippines, the electricity supply is unreliable. So we concentrate on Luzon region.
SeafoodSource: The Philippines has one of the most consistently growing economies in the region. How does this help seafood sales?
Valles: Foodservice and the variety of the restaurant concepts have increased enormously. But our assortment of products is limited. Of 600 [potential] seafood items, we are selling only 10. The palates of end-users have not been limited, the young are not so exposed to different customs.
But since then economy is growing and this is creating more wealth. There’s a growing middle class. Therefore they have started to demand better quality restaurants and more variety of products. Local food and beverage companies have been forced to think outside the box.
SeafoodSource: Will more demand make logistics easier for importers like you?
Valles: Yes. This would allow us to do better consolidation of shipments and offer better prices to our customers as we don’t have to hold inventory so long. Because we can’t fill a full container, we have to do consolidation of our imports. Right now, we do consolidation in three ports: Hong Kong, Singapore, and Taiwan. This is not price-efficient. And we have to be careful… We can’t hold the inventory too long.
SeafoodSource: The Philippines fisheries sector has been reporting a lot of problems in recent years of overfishing. What does that mean for local supply?
Valles: There is a shortage of local wild species. This is going on for years. There was a technical working group established that didn’t take off. There are two sides to this: fishermen and importers. The whole idea was to figure out how to let domestic waters rest and give species a chance to recuperate. We were going to have more imports. But nothing happened, in part because fishermen wanted import permits to go through fishermen, which was totally unacceptable.
Also, there is a rule that forbids the import of indigenous species. Every container of fish you go to the Bureau of Fisheries to stamp it and if you get your permit you import. In effect, the product can’t leave the port of origin [until you get the permit].
SeafoodSource: Has the Filipino seafood export sector also collapsed?
Valles: Shrimp exports have fallen because we lack post-harvesting facilities. People now realize the potential of investing in facilities. There was a time when farmers were not allowed to culture vannemei, just black tiger. There was a huge export business and we had good-quality shrimp. It was easy – you harvest, block-freeze, and ship, but there’s been a change. Japanese demand has dropped and now the vannemei ban is gone and they now realize that the volumes from vannemei are better. But you require a lot of infrastructure like processing and peeling. A couple of large plants are being built.
SeafoodSource: Has the shortage of domestic supply impacted prices?
Valles: Yes, prices have gone up. Prices for the three big species tilapia, milkfish, and galunggong [local fish species] have all shot up. It’s a supply issue. People who do shopping at the wet markets have been remarking how the tilapia have gotten smaller.
SeafoodSource: So there is room for cheap substitutions?
Valles: Absolutely. But there’s not much of a margin in this for importers…We’re talking about one-dollar fish.
